Why Amazon will go bankrupt and disappear

The headline of this article are not my words, they are in fact the words from the Founder and CEO of Amazon, Jeff Bezos.

In a recent Business Insider article, Jeff Bezos, the founder of Amazon.com and one of the world’s richest people, is reported to acknowledge this fact. “One day Amazon will fail. Amazon will go bankrupt. If you look at large companies, their lifespans tend to be 30-plus years, not a hundred-plus years”, Bezos is reported as saying.

It is a stunning admission. I must admit when I raise this fact with business owners and executives they normally get very defensive. Most never get to 30 years either.

Bezos is quoted as also saying “The goal was to delay the inevitable for as long as possible, and the way to do that was to focus on customers.”

Whilst the statistics confirm Bezos is correct, Adizes is dedicated to giving owners and executives an alternative to this “inevitability”. It starts with understanding the underlying issue that causes this “inevitable” outcome and resolving this issue first.

Companies just don’t last, and their lifespans are getting shorter and shorter. One reason may be that there becomes a lack of customer focus, but this is not the foundational issue. Companies that disappear have not responded to change. This may seem over simplistic, but this is actually the foundational issue.

Successful organisations do three things in response to change;

1. Identify problems and resolve them swiftly,
2. Identify and capitalise on opportunities faster than competitors,
3. Do both of these in the face of day to day demands.

But if it was easy to do this, everyone one would do it day in and day out! Organisations are often able to do it for a while, but it only lasts so long, as Bezos points out. Some of the problems and opportunities caused by change create a customer focus problem. Many are much broader than that, so you need a much broader view to surviving long term.

If Amazon, or any currently successful organisation does not continually speed up its ability to react to change, they will fail and become the next Toys R Us, Blockbuster, or where GE currently finds itself. So how do you constantly increase the ability to react to change that itself is accelerating?

The remainder of this article will unpack why this is a problem, what you can do, and how you can go about it.

Where to start? The change loop.

It all starts with imbedding the capability to manage change as it accelerates. As the rate of change increases, you get faster at managing it in response. You might be fine today, but if you do nothing new, change will accelerate and you'll fall behind. So creating an organisation that can accelerate its ability to deal with accelerating change is the key.

So let's start from the beginning. The core of the Adizes Methodology is to understand that it is in fact change that creates the problems and opportunities and, once identified, organisations must decide what to do and implement the decision. A forever loop.

However, if it was this simple everyone would do it all the time! Change can be an insidious creature, and over time it gets harder and harder because it accelerates, whilst you stay the same or maybe slow down.

If you look at companies that are either currently in trouble, or are not here any longer, somewhere along the line they did not manage this change loop. They either did not identify the problems or opportunities, did not make good decisions in response, or did not implement good decisions effectively.

What to do

So, at the highest level (or most foundational level) Bezos needs to focus on creating a culture and climate that can manage this change loop day in and day out if he doesn’t want Amazon to fail. The customer will be a subset of this. Furthermore, if Bezos can embed and institutionalise this ability before he leaves, he will be able to leave a lasting legacy where the chance of failure for Amazon is significantly reduced.

The reality is however, most organisations never survive their founder, irrelevant of historical success.

What stops organisations managing the change loop long term?

The issue is not the change loop itself, but seven broad conflicts that get in the way of managing the change loop. These conflicts can conspire to stop the identification, decisions, implementation or all three. If these conflicts become destructive and are not harnessed to become constructive, it slows down or stops the loop dead in its tracks.

Short example. Consider a team or group of people trying to decide what to do and implement the decision for a particular opportunity. However they have totally opposite styles that are causing destructive conflict, who each perceive the issue totally differently, have interests that are not aligned, and use the same word to mean different things thus having a conflict of definitions to wrestle with. If the conflict is destructive, how well are they likely to traverse the change loop?

Conflict is not bad, and is actually desired. And coming from a conflict of definition point of view, if you don't like the word conflict, maybe use tension, friction, whatever. But we need constructive conflict, not destructive conflict. This article will not go into how you create constructive conflict. There is a recipe, but will be the subject of future articles.

So yes, Amazon needs to create great customer outcomes. But over time if these conflicts don't get constant focus to drive constructive interaction, they will build up and stop the customer-focused initiatives either being identified, or decided on, or implemented.

What works one day, may not work another so in fact dealing with change needs regular change. It starts with being aware there is an issue in the first place and institutionalising the ability to make these conflicts constructive at every level. Institutionalisation means that the organisation has the embedded ability to do this day in day out, without being reliant on one or a handful of individuals.

Test yourself

How will you know if the conflicts are harnessed in your organisation? If you can answer a strong YES to the following questions, it is likely you have the systems, processes and structures embedded into the organisation;

1. The organisation has clear and separate frameworks, processes and structures for decisions vs implementation. The organisation makes the best decision it can collaboratively and with little destructive conflict. People love decision making meetings. 9 out of 10 times these decisions are actually implemented on time and on budget. The organisation essentially has a “Democraship” culture where we have democracy in decision making, but dictatorship in implementation. YES/NO/NOT SURE
2. The organisation understands the four roles of management (Producing, Administering, Entreprenuring & Integrating), and the inherent conflicts between them. The organisation knows how to structure roles to harness conflict. YES/NO/NOT SURE
3. The organisation understands there are different managerial styles (predominant Producers, Administrators, Entrepreneurs & Integrators), and it aligns those styles to the specific roles. It has processes to get the best out of each style. People are self-aware of their style and aware of other styles allowing the organisation to create a culture of high respect for each other. YES/NO/NOT SURE
4. The organisation understands there are different perceptions of reality, and this is embedded in our decision-making process. YES/NO/NOT SURE
5. The organisation is clear on what the values are today and has a clear process for embedding values for new staff, and reinforcing them for existing staff. YES/ NO/ NOT SURE
6. The organisation has an embedded process to deal with the conflict of definition in the identification and decision-making process. YES/NO/ NOT SURE
7. The organisation has an embedded process to ensure interests are aligned. By doing so, the organisation is able to constantly developed deep trust at every level of the organisation. YES/NO/NOT SURE

If you have answered NO or NOT SURE, you have the ability to make some improvements. What’s stopping you?

Ok, so how do they do it (and you can too)?

I have discussed this in previous articles, however, the process remains the same. At the highest level, what you need to do is create the following culture;

“Create an organisational culture and climate that can collaboratively identify, align, prioritise and resolve problems and opportunities, in the face of day to day demands, without outside intervention.”

If your organisation has this culture and climate embedded, it will not succumb to the same issues that generally kills organisations of all sizes.

Simple... right?

Let’s break it down into three sections.

1. When

NOW! You can start small, but you need to proactively build the organisational muscle to start doing this, on the right issues, early. You want to be practising and implementing on small issues. You don’t want to wait for major crises to begin. Implement it now when you don’t “need” it, so it is there when you really do.

The easy way

Get some assistance to drive it and create new space in the organisation. You're still in charge, but get some help creating initial momentum.

The harder way

Persevere yourself with no outside assistance. Test and trial until you find something that works and hope the change loop does not overtake you.

2. Install a Parallel Structure

Identifying problems and opportunities, and making decisions on what to do about them requires a different structure and processes to implementing decisions. They require different energy and a different approach, yet you still use the same people. Your normal organisational chart does not change.

The existing people come together at regular times, reserved specifically for identifying changes that are creating problems and opportunities, and build alignment amongst the team members. Use a specific process, where people have specific roles.

The process and framework you choose should be clear on what roles and responsibilities people will have in this change structure, what authority they will have, and what rewards will be open to them. Same people, different roles and structure.

When we help clients imbed this, we are normally talking about 2-3 hrs per month as a team on the identification, alignment and prioritisation. Then 2-4 times a month, small teams activating lower parts of the organisation are working on the issues identified by this main group.

The easy way

Get some assistance from a professional that does this day in day out. You're still in charge, but have a specialist assist until you are self-sufficient to create new capacity in the organisation.

The harder way

Persevere yourself with no outside assistance. Test and trial until you find something that works and hope the change loop does not overtake you.

3. Process

Even with regular sessions locked in the calendar, and people play specific roles, responsibilities, authority and rewards to support the desired outcomes, you need a specific process to harness the 7 conflicts discussed above. We need to move from personal management of these conflicts, to institutionalised management of these conflicts to ensure they are constructive irrelevant of who the owner, leader or manager is at any point in time.

Adizes does this through processes developed over 45 years in over 70 countries, but you may have other frameworks for this. It doesn't matter- as long as it is fit for purpose. Your goal is to have a process to harness the conflicts, ensure that the best decision possible is made, and that it will actually be implemented on time and on budget. Lots of good decisions get made every day. Most don’t get implemented.

The easy way

Get some assistance from a professional that does this day in day out. You’re still in charge, but have a specialist assist until you are self-sufficient.

The harder way

Persevere yourself with no outside assistance. Test and trial until you find something that works and hope the change loop does not overtake you.

The following cartoon is provided "tongue in cheek". It highlights the first challenge. You need to pause from fighting your day to day battles, and investigate if there is an improved way to identify and resolve problems and opportunities, in the face of day to day battles and demands.

Learn more

The easiest way to implement the above is to get some assistance. We are here to help www.adizes.com.

I invite you to join Adizes Associates from around the world for the 2019 Annual Adizes Convention held in Sydney from 31st January to 1st February. Many concepts, like this article, will be discussed, and will give you immediate takeaway value. Learn from global case studies, so you can gain the knowledge for yourself.

Redeem the below offer until 15th December at adizesconvention.com.au

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